Does Singapore Technologies Engineering Ltd's (SGX:S63) Past Performance Indicate A Stronger Future?

When Singapore Technologies Engineering Ltd (SGX:S63) released its most recent earnings update (30 September 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Singapore Technologies Engineering's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not S63 actually performed well. Below is a quick commentary on how I see S63 has performed.

Check out our latest analysis for Singapore Technologies Engineering

How S63 fared against its long-term earnings performance and its industry

S63's trailing twelve-month earnings (from 30 September 2018) of S$547m has increased by 8.4% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -2.5%, indicating the rate at which S63 is growing has accelerated. What's enabled this growth? Let's take a look at whether it is merely a result of an industry uplift, or if Singapore Technologies Engineering has experienced some company-specific growth.

In terms of returns from investment, Singapore Technologies Engineering has invested its equity funds well leading to a 23% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 7.9% exceeds the SG Aerospace & Defense industry of 4.5%, indicating Singapore Technologies Engineering has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Singapore Technologies Engineering’s debt level, has increased over the past 3 years from 12% to 15%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 74% to 15% over the past 5 years.

What does this mean?

Singapore Technologies Engineering's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as Singapore Technologies Engineering gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Singapore Technologies Engineering to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for S63’s future growth? Take a look at our free research report of analyst consensus for S63’s outlook.
2. Financial Health: Are S63’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2018. This may not be consistent with full year annual report figures.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.